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Current time:0:00Total duration:5:57

Video transcript

if you wanted to build or produced most anything I want to think a little bit about what you would need to do it and I have some pictures here just to get our imagination going these guys are up to making something with iron ore maybe making iron bars or making some type of a thing out of iron and right here is a an old picture of some planes being made in a factory but let's just think in very general terms the things you need to produce anything so first of all you're gonna need some land and that's definitely true if you're running a farm or if you're trying to produce timber but you definitely need land even if you have a factory obviously both of these factories are sitting on top of some land then you're going to need a building maybe but most probably a building you're going to need some tools and equipment tools and equipment then you might need some raw materials in this case it might be iron over here - you need some metal you might need some electricity or some oil to keep the the production lines going so you're gonna need some raw materials raw materials and then you're gonna need people to actually work in your factory in this guy you know these guys putting these hot bars of iron inside of whatever this thing right over here is or the people working on the factory line you don't see him here this must be off time but you need people to actually work on the factory line to tighten bolts and all the rest of things so you're gonna need labor you are going to need labor and if you put all of these things together if you put all of these things together so let me put them all together if you put all of these things together then you should be able to produce your product so you'll be able to output whatever whatever you set yourself to do so in the classical sense when you think about all of these different things that you might put into production sometimes they're referred to as a factor the factors of production they separate out and this is in the classical sense they separate out building in the tools and equipment as one of the classes so you have land you have labor and you have buildings and sometimes just to throw it in there sometimes you'll throw in management or organization in here someone needs to figure out how to lay out all this type of thing so this could also be a factor of production but buildings and tools and equipment they're kind of separated out from everything else and in the classical sense they're referred to as capital they are referred to as capital and they kind of have this separate distinction because these are things that are made by human beings for the specific purpose of producing other things so obviously there are other things that are made by human beings for example you could have a you could have a let me think of something that's nicely so a hat a hat is clearly made by a human being but it's not made to it's it's not produced to produce other things it's meant for fashion it's meant to kind of improve someone's quality of life but it's not you it's not made to make other things in this case the building and the tools the whole reason why they were made is to make other things and so in the classical sense they are referred to as capital now if we go to kind of cool more modern times you'll hear words like you'll hear words like human capital human capital or financial capital and you'll see a lot of different types of capitals that people try to talk about human capital or a financial capital so what are they talking about because as in the classical sense capital were things that people were made so that those things can help us make other things so the analogy is is human capital isn't just straight-up labor it it plays a role in it but when in modern times when people talk about human capital they're trying to make the same analogy they're kind of investments made in humans so that those humans are better at producing other things so human capital when people refer to it they're things like education education skills skills talents that someone might have talents experience experience that someone might have inside of them or that were invested in them if you think about the situation of Education that make them more productive so there are things that are thrown into a human being that make them able to produce more output so this is what people refer to as human capital and how it's different than just straight-up labor labor is just look any human being can go there and move something from one place to another or pick something up and put it on a shelf or take it off of a shelf and put on another shelf but what human capital is are the investments in that person that make them more productive more skilled more able to do more interesting things the same thing is true just to throw it in there just so you can kind of see this analogy is financial capital you could just say look there's something like you know there's money for money's sake or there's you know that you could use to buy a hat or that you could use to buy really almost any of these other things but when people talk about financial capital they're talking about money that's being used for the purpose of producing more output so you could view it as the money that you actually need to run a factory that you could that you could you know for example they'll call it working capital it's the money in the cash registers that you can actually run your store or run your restaurant or it could be money that's put to work by buying a kind of traditional capital - we're buying these capital goods so that you can produce more output but the whole idea here I just want to introduce you to the idea of capital of capital it's central to the word capitalism in its classical sense and then maybe in the more modern sense especially when people talk about something like human capital